Nick’s Novelties, Inc., is considering the purchase of new electronic games to place in its amusement houses The games would cost a total of $680,000, have an eight-year useful life, and have a total salvage value of $68,000. The company estimates that annual revenues and expenses associated with the games would be as follows: $250,000 Revenues Less operating expenses $60,000
![[The following information applies to the questions displayed below.] Nicks Novelties, Inc., is considering the purchase of new electronic games to place in its amusement houses The games would cost a total of $680,000, have an eight-year useful life, and have a total salvage value of $68,000. The company estimates that annual revenues and expenses associated with the games would be as follows: $250,000 Revenues Less operating expenses $60,000 Commissions to amusement houses Insurance Depreciation Maintenance 35,000 76,500 70,000 241,500 Net operating income $ 8,500 2 Required 1a. Compute the pay back period associated with the new electronic games Payback Period Payback Period Payback period Choose Numerator Choose Denominator: years 1b. Assume that Nicks Novelties, Inc., will not purchase new games unless they provide a payback period of 6 years or less. Would the company purchase the new games? No Yes](http://d2vlcm61l7u1fs.cloudfront.net/media%2Febe%2Febe55af3-2721-434b-8804-17f520388761%2Fphp0O06mN.png)